The Network’s Industry Symposium Takes California Offshore Wind Beyond ‘Floating an Idea’ to Launching a Clean Energy Sector

March 2, 2017, Tsakopoulos Library Gallery, Sacramento, California, the Business Network for Offshore Wind, in conjunction with Pacific Offshore Energies Trust (POET) hosted a full-day symposium with offshore wind developers, businesses, and Federal and State regulators to ensure offshore wind becomes part of California’s future clean energy mix.

The formal panels throughout the day provided insights into capturing the European downward trends in offshore wind electricity prices; the importance of the port infrastructure, availability of logistics for a planned supply-chain roll-out; and examples of the training required for skills to match the demands of building offshore wind facilities. World class offshore wind developers including Principle Power, Dong Energy, Statoil, Magellan Wind and Trident Wind all defined their views and interest in advancing floating offshore wind along California’s coast.

UK’s Catapult described the shifting trends in Europe and the work presently underway to optimize efficiency while the National Renewable Energy Laboratory demonstrated its approach for quantifying the potential energy, which would commercially be connected to California’s grid. All participants remained mindful of the respect needed to work with multiple present users of California’s existing coastal waters including fisheries. A range of environmental specialists shared details that contrasted differences of west coast and east coast bird types as well as advanced technologies and monitoring practices that could be used to support utility scale projects through California’s multiple environmental permitting process.

This Symposium provided a platform for the California Energy Commission along with the U.S. Department of the Interior’s Bureau of Ocean Energy Management (BOEM) to repeat some of the points underscored in a follow up meeting as the two organizations prepare for the July 13th Task Force meeting.

This summer there is a potential for up to 6 offshore wind energy sites to be selected by BOEM off the coast of California. As many expect the U.S. east coast to have 10 GW of fixed bottom offshore wind deployed by 2030, there is little to doubt about the strong interest to have 50 GW of offshore wind connected to California’s grid by the same date. There is no looking back: we are beyond floating the idea of developing offshore wind along the west coast.

Meet Deepwater Wind and US Wind: Maryland Offshore Wind Industry Breakfast

March 7th Maritime Institute Conference Center, Linthicum Heights, Maryland

By Ross Tyler, Business Network for Offshore Wind

The Business Network for Offshore Wind convened a ‘share day’ between industry and Maryland’s contending offshore wind developers: Deepwater Wind and US Wind. The half-day event commenced with a “members’ only” meet-and-greet with Deepwater Wind executive Chris Van Beek. Each of the members was able to share their corporate profile and to ask poignant questions of the company’s plans for using Maryland based companies and its vision for how U.S. offshore wind sector is likely to ramp-up in the coming years. The members provided Deep Water Wind with a rapid and comprehensive insight into the rich variety and full spectrum of corporate capabilities and competencies that are available for mid-Atlantic offshore wind deployment.

The breakfast networking session filled the conference room with a total 150 attendees comprised of guests and other stakeholders who were invited to participate. Liz Burdock, Executive Director of the Network, formally opened the second part of the event and stressed the importance of the fast approaching May 17th, 2017 deadline for the Maryland Public Service Commission (PSC). The PSC is expected to announce which of the two developers will be awarded the Offshore Renewable Energy Credit (OREC) – a mechanism crowning Maryland as the most advanced state policy in the nation – that provides financial assurance to enable the developers to secure third party project financing. Ross Tyler, also representing the Network, followed by providing a summary of a new report, commissioned by the Baltimore Propeller Club. The joint report compiled by the Network and BVG Associates in the UK, focuses on the global trends in which different industry sectors are diversifying their market targets to include offshore wind. There are strong parallel skill sets for different phases of the offshore wind sector that can be found beyond oil and gas but also within: aerospace and defense; automotive; composites; nuclear; dredging; rail; and other renewable energy sectors such as onshore wind. The Maryland Department of Commerce has provided a list of over 80 in-state aerospace & defense companies, many of which could provide a local resource for the offshore wind developers.

Chris Van Beek from Deepwater Wind, presented detailed insights into each of the steps the company took during the permitting, constructing, and commissioning of the Block Island Wind Farm project. Clint Plummer from Deepwater Wind went on to share the plans to develop the mid-Atlantic with staggered increments to match demand and business rate payers’ appetite. Paul Rich from US Wind underscored a fundamentally different approach with a more accelerated goal for scale to attract and to anchor original equipment manufacturers (OEMs) such as JDR cables from the UK, and possibly Heavy Metal Fabricators from Rhode Island. Sam Berne from the Maryland Energy Administration concluded the formal part of the program by providing a history of the OREC; an overview of the process; and assistance programs for small businesses, minority-owned businesses and the specific industry skill needs. The morning concluded with a question and answer session, extensive networking, and a reminder for businesses wanting to have the nation’s first commercial scale offshore wind industry started in Maryland, that they (and other interested individuals) should make their voices heard at the PSC public hearings:

Saturday, March 25th, 2017 Beginning at 12:00 Noon
Stephen Decatur Middle School Cafeteria
9815 Seahawk Road Berlin, Maryland 21811T

Thursday, March 30th, 2017 Beginning at 6:00 p.m.
Joint Committee Hearing Room Legislative Services Building 90 State Circle
Annapolis, Maryland 21401

Meeting the Commercial Marine Community

By Ross Tyler, Business Network for Offshore Wind

The Business Network for Offshore Wind attended the Commercial Marine Expo in Providence, Rhode Island, March 15-16th. In addition to having an exhibition booth, the Network hosted a panel presentation titled: Growing the Supply Chain: Understanding Offshore Wind and its Opportunities.

During the opening remarks, Ross Tyler from the Network explained that the Network was not a developer looking to buy products or services but represented its members, which are mainly U.S. businesses that are the building block of a domestic U.S. supply chain. The Network is helping businesses that offshore wind developers will need to utilize for construction and maintenance of the offshore wind areas.

The Network underscored that Deepwater Wind’s launch of Block Island’s offshore wind facility was the nation’s entrance into the offshore wind market. The total of the U.S. leased offshore wind areas to date, along the east coast, approximates a potential pipeline of 5,000 MW. This figure compares to the UK market in 2004, and equates to approximately 4,500 construction and implementation jobs with an additional 500 positions for supporting 20-25 years of operations and maintenance.

The U.S. is poised to rapidly accelerate the offshore wind industry at a much faster rate than Europe as it has two main advantages:

  • proven large capacity generating wind turbines (8 MW plus), and
  • offshore wind areas of size and scale (e.g. New Jersey is tenfold larger than London Array U.K.). Both advantages are expected to contribute to the downward trend in offshore wind electricity prices that will result in increased job demand.

The Network introduced two of its members: Luther Blount of Blount Boats and Phillip White of Pharos Marine Automatic Power. Blount Boats shared its experience in selecting the optimal crew transfer vessel for supporting an offshore wind farm. Pharos Marine explained the considerations that went into providing the navigational aids (signs and lighting) for the Block Island offshore wind farm. The Network concluded the panel by sharing photographs from the construction of the Block Island project, taken and supplied by the Northeast Regional Council of Carpenters.

The audience, which included suppliers of specialized rope products; safety equipment; anti corrosion products; the U.S. Coast Guard (District 1) and local head charter fishing boat operators, were active with questions involving the wind farm lifetime expectancy and ways to enter into the maintenance element of the supply-chain.

The Importance of Planning for Jobs in the Offshore Wind Industry

By Ross Tyler, Business Network for Offshore Wind

The Network presented the importance of planning for jobs at US Wind’s ‘Outreach and Information Series’. The Network originally used the motto: ‘Offshore Wind = Onshore Jobs’. Internet search engines of the motto reveals a Greenpeace report[1] written in 2004 about the expected and accelerated need for a full variety of jobs to satisfy the emerging UK offshore wind sector. The report resembles the present-day U.S. market and some of the parallels could be a warning!

Within the report there are three growth scenarios: 10%, 20% and 30%. The 10% growth rate reflects the present U.S. status with its pipeline of projects approaching 5GW to be deployed over the coming 5 years. Similarly, for the U.S. to reach the National Offshore Wind Strategy of 22GW by 2030, we may expect a shift to match the UK’s 20% growth rate. However, the U.S. will require only a sudden burst of growth from states such as New Jersey or California, and the nation will be at a pace reflecting the UK’s 30% scenario.

What does this translate to with respect to jobs and skills? The Greenpeace report quantifies job totals at the 10% rate with 4,300 Manufacturing and Installation (M&I) and 450 Operations and Maintenance (O&M). Trajectory numbers for 20% after 15 years suggests 42,000 jobs and at 30%, 76,000. The numbers are significant and the topic of how to plan for making the skill sets available at the correct time is complex.

DNV-GL has produced a report[2] for the benefit of the emerging Indian offshore wind market – which resembles the state of the U.S. market in 2010. The report provides an offshore wind procurement list with over 150 key materials, equipment and components – all of which have to be manufactured, supplied or operated. The diversified range in job types added to the complexities of planning. Greenpeace summarizes key groupings of sub-sectors that include: finance; planning and legal; construction and commissioning; cables; electrical switch gear; foundations; civil engineering and turbine manufacturing. Taking a holistic view, 57% of the jobs are primary manufacturing while 7% are secondary. In contrast, 15% of primary service jobs are on site while 25% of secondary service jobs such as financing are not site specific.

While the majority of the service jobs are not site-specific, their scattered geography further adds to complexity of planning (training and availability). However, as the manufacturing and installation jobs aggregate around offshore wind locations, there is a need for training institutions to follow the developers plans which will depend on existing port infrastructure and willingness to invest. Preparing, planning and providing training for jobs based on a cluster with M&I around a single waterside facility or evenly dispersed throughout a single regional port such as Baltimore will be easier to manage but more demanding on the local institutions, compared with the utilization of a network of ports along the coast. Absent of a federal Czar for offshore wind jobs, there is a need for close collaboration between developers, state governments and industry to monitor and grow the levels of the correct job type at the appropriate time and to plan to build on recurring needs so as not to constrict the growth of the industry. The Network, in conjunction with BVG Associates is preparing a report that identifies other industry sectors where parallel skills are found and could be a potential source for the growing U.S. offshore wind market.

[1] http://www.docucu-archive.com/view/fc71f889dab795663738d8b514baf84e/OFFSHORE-WIND-ONSHORE-JOBS-Greenpeace-UK.pdf

[2] https://www.dnvgl.com/news/offshore-wind-development-in-india-fowind-launches-new-report-on-supply-chain-ports-and-logistics-69602

Creating a United States Offshore Market: Public and Private Mechanisms

By Stephen Markham

The development of the United States Offshore Wind market will be shaped by the conjunction of public and private mechanisms. Primarily, federal initiatives in the US have provided the roadway on which an offshore wind market can be built. The recent release of the National Offshore Wind Strategy outlines 34 actions and goals that will be used as a guide for future offshore wind development. Since the 2011 plan and the assistance of $250 million in funding, there have been developments in turbine technology, offshore wind market acceleration, and procurement of various technology demonstrations, including twisted jacket foundations, gravity based structures in Lake Erie, and the Aqua Ventus floating turbine in Maine. Further utilization of Investment Tax credits and Production Tax Credits will be essential to get offshore wind businesses established until they are capable of a self-sustaining market in the future.   Federal policy initiatives established in 2015 have contributed to the accelerated development of renewables: EPA’s Clean power plan focuses on a reduction of carbon dioxide and the COPP-21 Paris Agreement has the goal of reducing climate emissions by 2025. Ultimately, the federal government looks to double its clean energy research and development over the next five years according to Mary Ann Christopher of Foley and Lardner LLP. By 2030, offshore wind may become a competitive energy without tax credits. As the cost of offshore wind has decreased by 40% since 2008, this decreasing cost trend demonstrated the potential for a cheap form of energy in the near future.

On the state level, renewable energy goals are driving development of new energy projects. Currently led by Massachusetts with a goal of acquiring 1600 MW of energy from offshore wind by 2027, the development of state renewable goals are continuing to become delineated. The sale of two commercial wind leases by the U.S. Bureau of Ocean Energy Management (BOEM) outlines a plan to begin the development of offshore farms for the State of Massachusetts. Other Atlantic coast states are also underway in creating policy that would support the development of new offshore technologies. Ocean special areas management plans and Offshore Renewable Energy Credits (ORECs) mandates in Rhode Island and Maryland respectively are spurring developer interest in in these states. Incentive programs such as ORECs create opportunity for wind development in Maryland. According to Stan Parker of Levitan and Associates, in Delaware, ORECs are equivocated to 3.5 times a regular REC as an incentive to install these offshore technologies. However, Rhode Island is the only state with an offshore wind farm in the United States. Built in state waters, this wind farm is the first of its generation and a snapshot of the technology to come. Further up north on the east coast, Maine too is vying for a piece of the offshore wind market. Maine had set a 30% renewable goal in 1999, making it a great candidate for offshore energy, however a hurdle it must overcome is its deep waters, leading to their investments in research products such as Aqua Ventus at the University of Maine which aim to circumnavigate this issue to make offshore wind a possibility in the near future.

On the city scale, further requirements for renewable mandates are beginning to take shape. In New York City, the Office of the Mayor is looking to meet its 80×50 goal, which is an 80% reduction in city carbon by 2050.   To meet this, the city is looking to expand current initiatives to develop trajectory for NYC’s built environment and infrastructure. The city’s current plan to reduce emissions includes improvements in waste management, transportation, and the infrastructure’s energy supply. NYC hopes to see a shift towards more solar energy by 2030 and energy storage by 2020. This shift will show a large increase in direct and indirect investments in large scale renewable energy and energy storage. These initiatives are constrained by budget limitations of the cities as they are at odds with money spent on teachers, firefighters, and policemen. The differences in state policy, gas prices, and energy prices will drive the market and interest in the OSW development plans. Overall, these developing mechanisms on the federal, state, and city levels will create the mold for offshore wind policy in the United States.

Did you miss it? ABC News covered our Network breakfast

See the coverage of the Network’s Meet the Developer breakfast with Deepwater Wind and US Wind!

http://www.abc2news.com/news/state/offshore-wind-developers-talk-plans-to-bring-first-wind-farm-to-marylands-coast

 

Maryland Prepares Offshore Wind Push

March 2017

By Ross Tyler

Maryland’s offshore wind opportunity has not been in recent news. Activities in other states, such as Massachusetts, Rhode Island and New York, overshadowed the procedural advancement of the Maryland Offshore Wind Renewable Energy Credit (OREC), an up-to $1.9 billion financing mechanism to be awarded by the Public Service Commission. Read more >>

European achievements pave the way for investment in American OSW

By Linda Strowbridge

 

Despite the financial challenges facing the first projects in America’s nascent offshore wind energy industry, international finance experts insist there are “reasons to be cheerful” about the prospects of securing investors for OSW developments.

Established four years ago to finance energy developments that are both profitable and green, the UK Green Investment Bank has committed U.S. $3.3 billion to date to more than 80 projects, including eight offshore wind projects, valued at more than $14 billion.

From the beginning, the bank worked to partner with co-investors. Primarily, that has involved investments from utilities, strategics and industrials, said Nick Gardiner, the bank’s Head of OSW.

“But increasingly, we have also partnered with other financial players both in the UK and also on an international level,” Gardiner said. “During the last 12 months, what is happening internationally in this sector is extraordinary… the market is becoming more and more liquid. We are seeing more partners willing to invest during the construction phase.”

In particular, investors have started expressing strong interest in OSW projects in the northeastern U.S. and Taiwan, Gardiner added.

Speakers at the 2016 International Offshore Wind Partnering Forum attributed that growing interest in OSW investments largely to advances made within Europe’s offshore wind sector. Technologies have advanced, supply chains have expanded, investment and risk-management arrangements have improved, and a string of projects have developed financial and operational track records.

Each new development still faces a learning curve, Gardiner said. But the European OSW market has entered “an early, mature phase” and attracted more investors.

American OSW projects, however, can benefit from Europe’s achievements in establishing the industry.

For example, Societe Generale finances energy projects around the globe and has become the leading project finance advisor for energy projects in the Americas.

While describing his project history, the investment bank’s CFA Director Energy Group Alexander Krolick said, “What I am most proud about is one little line in 2015 where we acted as advisor and underwriter for the Deepwater Block Island Wind Project. We provided $300 million in debt to the project. It was a real personal pleasure for me to transfer the experience I gained in Europe to the U.S.”

Several factors make OSW developments in the northeastern U.S. attractive to investors, said Bob Haight, Vice President/Senior Equity Advisor for Siemens Financial Services. There is a robust project financing market centered in New York City. Government initiatives – such as renewable portfolio standards, investment tax credits and one-stop-shopping for OSW permitting – provide incentives to investors.

“You also have excellent locational advantages, particularly in the northeast of the United States,” Haight said.

The region has amassed considerable information about offshore wind resources, identified attractive OSW sites in relatively shallow water, and has the opportunity to develop OSW farms close to load centers.

In the face of those promising factors, however, American OSW developers will still face challenges securing financing for their projects.

Several factors are particularly concerning to investors, IPF speakers said.

“The Jones Act is a very big challenge,” Haight said.

Its restrictions on vessel use will create logistical challenges in OSW construction and likely require developers to heighten equipment redundancy levels (and equipment costs) in order to stay on schedule.

Other factors concerned investors include:

– The current OSW supply chain, which would require American developers to contend with the cost and timelines of sourcing equipment from Europe;

– Political risks that tax incentives or renewable energy standards might change;

– Difficulties with monetizing investment tax credits;

– The litigious nature of the American market; and

– Competition from low-cost natural gas developments.

Haight, whose company has a minority ownership stake in energy projects utilizing Siemens equipment, suggested a few things that American OSW developers can do to make their projects more attractive to banks and other investors.

“First, you develop scalable projects,” he said. “You don’t go out with a 400-MW wind farm and immediately try to get that one financed. That’s a big bite. It’s a lot to ask utilities to take a flyer on a 400-MW farm to meet their clean energy objectives. It is a lot to ask the bank financing market to do something with 400 MW or the tax equity market to bridge tax equity for 400 MW. If you can do things that are scalable and digestible, that makes a lot more sense.”

Second, look internationally for bank financing. Securing financing from American banks might be challenging initially. European banks, however, are more comfortable with and enthusiastic about OSW and “are more than happy to take on contracting risk in the United States,” Haight said.

Finally, monetizing tax credits on projects with three-year construction schedules is bound to be challenging. So OSW developers should plan to spend time seeking out and impressing those relatively rare investors who have the tax capacity to handle those credits.

 

Maryland Moving Forward

By Ross Tyler

Maryland’s offshore wind opportunity has not been in recent news. Activities in other states such as Massachusetts, Rhode Island and New York, overshadowed the procedural advancement of the Maryland Offshore Wind Renewable Energy Credit (OREC), an up to $1.9B financing mechanism, to be awarded by Public Service Commission.

The buildup of the OREC award throughout this Spring is news worthy, as it will demonstrate the first successful publicly supported finance mechanism for offshore wind in the United States.

US Wind and Skipjack Energy, LLC, a subsidiary of Deepwater Wind, are the two developers competing to be awarded the OREC financing. Both have submitted viable projects and are currently under review. A decision to award the OREC will be made May 17th, 2017.

On January 9th 2017, US Wind organized the 3rdmeeting within its offshore wind information series in Salisbury, Maryland. Following opening remarks, the Business Network for Offshore Wind was invited to report on the state of the industry and provided the following points:

  • The U.S. offshore wind market is here to stay and grow. There are very few new offshore wind lease areas in Europe and the developers, along with the supply chain businesses, are seeking new markets. Asia and the United States are strong contenders however the U.S. market provides new opportunities at a scale that will help drive down costs globally.
  • Maryland can expect significant job impacts from offshore wind. The highest profile job opportunities arise from the domestic production of the primary components such as foundations, transition pieces, blades, and cables. The production of the large and heavy primary components requires a port, such as Baltimore, with good deep water access. By meeting with secondary and tertiary supply chain businesses in Europe the Network recently learned the importance of understanding the dynamic and necessities of the industry. Secondary and tertiary suppliers that are involved in providing products such as scaffolding, coatings, ladders, fastenings, hydraulics, concrete and electrical components – companies that are to be found on the Eastern shore in Maryland – could be called upon at any time during installation as well as over the 25 year operations and maintenance lifetime of the project. Intracompany relationships and trust are vital in the formation of the offshore wind supply chains. Case studies of European businesses entering the offshore wind supply chain often have an underlying story line of being called in because of a pressing need or stemming from a recommendation made by an established supply chain member. Intracompany relationships and trust are essential.
  • Interfacing with developers, original equipment manufacturers (OEMs) and other supply chain members to feature and to remind colleagues of businesses’ capabilities remains key to becoming part of the emerging U.S. supply chain. Equally important is the need to stay engaged in understanding the changes in the offshore wind industry as it seeks to become more efficient with lower costs. The changes bring opportunities which are opening for new players. The Network helps its members with both these strategies through organizing meetings, regional events and its signature event, the International Partnering Forum – which in 2017 is taking place in Annapolis, Maryland (April 19th– 21st, 2017). In addition, for members seeking to witness first hand the full spectrum of European offshore wind market, the Network is organizing a pavilion to attend the Global Offshore Wind Conference and Exhibition in London (June 6th– 8th, 2017). The Network is presently working on site visits to ports and or manufacturing sites within Europe, which will occur before and after the Global offshore wind event. For more information, contact Executive Director Liz Burdock (liz@BizMDOSW.org)

The Network will host a supply chain information meeting for its Members and Maryland companies on March 7th. Both Skipjack Energy, LLC and US Wind will present presentation on the projects and contracting strategies.

U.S. Offshore Wind in 2017

As we embark on 2017, it is time to reflect on U.S. offshore wind accomplishments in 2016.

  • The United States’ first offshore wind project was constructed and installed off the coast of Rhode Island.
  • Mid-Atlantic and Northeast states passed legislation that culminated in a regional project pipeline, and established a market for offshore wind energy in the United States.

Positive developments in the U.S. offshore wind industry in 2016 built confidence in the industry, as demonstrated by Statoil paying the highest auction price in US offshore wind history for lease rights to the New York Wind Energy Area.

Europe’s offshore wind industry price goal of €100/MW by 2020 was not only achieved, it was shattered by:

  • DONG Energy delivering a tender for a Dutch wind farm with a strike price of €72.70/MWh ($81.56/MWh)
  • Vattenfall winning a tender that represents one of the lowest costs per MW hour for any offshore wind power project in the world, coming in at just €49.9/MWh, equating to $55/MWh or 5.5¢ a KWh.

In less than 12 months, the cost of offshore wind in Europe fell dramatically, and is well ahead of the 2020 target. The U.S. is able to benefit from cost cutting lessons learned in Europe, with its more experienced, efficient supply chain, and technological advances.

In 2017, the U.S. offshore wind industry will build upon domestic and global accomplishments in 2016. In the U.S., states drive energy policy; and with the falling cost of offshore wind, it is now a viable utility-scale, clean energy option. Several states have offshore wind policies enacted, and a flurry of activity will continue.

In May, Maryland will decide to award some or all of its $1.9B in offshore renewable credit financing to build a project off its coast. US Wind and Skipjack (a subsidiary of Deepwater Wind) are competing for the award. Both developers have proposed viable projects that will lead to commercial scale offshore wind development.

Massachusetts will release an RFP for the development of the first project under its MA Energy Diversity Act (H.4568). Three developers will compete for this project—Dong Energy, Offshore MW and Deepwater Wind- ensuring that at least a 400 MW project will move forward.

NYSERDA will continue work on implementing the State’s Blueprint for New York State Offshore Wind Master Plan. An RFP has been released for major components of the plan, and it will be awarded this Spring.

In 2017, New Jersey will re-enter the offshore wind market, and California will look to start the development of its offshore wind industry.

The Business Network for Offshore Wind alerts our members to all developments that shape the U.S. market, as well as relevant activity in each state. If you see an opportunity for a role in the U.S. offshore wind industry, there is no better time to get involved than 2017. Please contact me, Liz Burdock, (Liz@bizmdosw.org) for information, or if you are not a member, sign up here.

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